When your employer hands you a severance agreement, it rarely feels like a negotiation. It feels like a stack of paperwork between you and the check you need. But a severance agreement is a trade, and a serious one: in exchange for severance pay, you are giving up your right to sue your employer — usually for every employment claim you have, including ones you do not even know about yet. Before you sign, here is what California law says you should know.
California Employers Are Not Required to Offer Severance — But Once They Do, Rules Apply
California law does not require employers to offer severance pay. Unless your employment contract, offer letter, or a company policy promises it, severance is voluntary on the employer’s part. That is exactly why it is negotiable: the first offer is the employer’s opening position, not a policy ceiling. If you had strong leverage — a long tenure, a potential discrimination or retaliation claim, or the company simply wants certainty — the initial number is often not the final number.
What California does require, once severance is on the table, is a fair process. Several statutes give you time, counsel, and specific protections before your signature becomes binding.
You Cannot Be Rushed Into Signing
Two separate laws give you time to review a severance agreement, and they apply to different groups.
For every employee: five business days and the right to counsel. Under SB 331 (the “Silenced No More Act”), for any severance agreement signed on or after January 1, 2022, the employer must give you at least five business days to consider it, and must advise you in writing of your right to consult an attorney before signing. You may sign sooner if you choose, but the employer cannot demand an immediate signature.
For employees 40 and older: longer, federal protections. If the release waives age-discrimination claims — as most general releases purport to — the Older Workers Benefit Protection Act (OWBPA) requires at least 21 days to consider the agreement (45 days when severance is offered to a group as part of a layoff or exit-incentive program), specific written advice to consult an attorney, and a 7-day revocation window after signing during which you can change your mind. The agreement is not enforceable until that revocation period expires. An employer that pressures you to sign faster than these timelines allow may be handing you a waiver a court will not enforce.
What You Are Giving Up: The General Release
The centerpiece of nearly every severance agreement is the general release of claims. It typically covers claims under California’s Fair Employment and Housing Act (FEHA), federal anti-discrimination laws, wrongful termination, wage and hour claims, and more. Most California releases also include a waiver of Civil Code section 1542 — the right to preserve claims you do not know about yet. Once signed, that waiver is final: you cannot come back later and sue over a claim that existed at the time you signed, even if you had not discovered it.
Most California releases also include a waiver of Civil Code section 1542 — the right to preserve claims you do not know about yet. Once signed, that waiver is final: you cannot come back later and sue over a claim that existed when you signed, even if you had not discovered it. A release is only valid if it is knowing and voluntary, so read it — and have an employment attorney read it with you.
What California Law Says You Cannot Waive
Even the broadest release has limits. In California, a severance agreement cannot validly require you to give up:
- Unpaid wages and your final paycheck. Your employer cannot condition payment of wages you have already earned on signing a release. If you were fired, your final paycheck is due immediately; if you quit, within 72 hours (or immediately with 72 hours’ notice). Severance is extra — it cannot be used as leverage to withhold what you are already owed.
- PAGA claims. You cannot waive the right to bring a representative action under California’s Private Attorneys General Act on behalf of the state. Waivers of PAGA claims in severance agreements are unenforceable.
- Unemployment benefits. No severance agreement can waive your right to file for unemployment insurance.
- The right to file a government charge. An employer can ask you to give up your right to personally recover money through a government proceeding, but not your right to file a charge with, or cooperate in an investigation by, the EEOC or the California Civil Rights Department (CRD).
- Future claims. You can release claims that exist when you sign. You cannot waive claims that have not arisen yet.
If your agreement purports to waive any of these, that provision is void — and it is a sign the rest of the agreement deserves a hard look.
Non-Disparagement and Confidentiality: Where California Draws the Line
Many severance agreements ask you to stay quiet: a confidentiality clause, a non-disparagement clause, or both. California now draws a hard line around what those clauses can cover.
Under SB 331 and Government Code section 12964.5, a separation agreement cannot prohibit you from disclosing factual information about unlawful acts in the workplace — including harassment, discrimination, retaliation, or any other conduct you have reason to believe is unlawful. Any provision that does is void and unenforceable. The law also requires specific carve-out language in non-disparagement provisions tied to a FEHA release, preserving your right to discuss unlawful conduct.
What the employer can still protect: the dollar amount of your severance (confidentiality of the settlement amount is still enforceable) and genuine trade secrets. So a clause that says “you may not disclose the amount of this agreement” is generally fine; a clause that says “you may not discuss anything about your employment” is not.
The deadline to act is real. FEHA claims must generally be filed with the CRD within three years of the unlawful act — and signing a release can cut off that right entirely. If you suspect your termination involved discrimination, harassment, or retaliation, get advice before you sign away the claim.
“No-Rehire” Clauses Are Banned
Some employers used to tuck in a clause barring the departing employee from ever working for the company — or its affiliates — again. California banned that practice. Under Labor Code section 1002.5 (AB 749), settlement and severance agreements may not contain provisions preventing you from obtaining future employment with the employer or its parent, subsidiary, or affiliated companies. If your agreement includes one, it is unenforceable.
Non-Competes Do Not Belong in Your Severance
California has long voided post-employment non-compete agreements (Business and Professions Code section 16600), and the state strengthened that prohibition in 2024: SB 699 and AB 1076 created a private right of action and required employers to give written notice that old non-compete provisions are void. Do not let a severance agreement smuggle a restrictive covenant back in. An unenforceable non-compete in your release is not just dead weight — in California, including one can itself be treated as unfair competition.
Practical Tips Before You Sign
- Do not accept the first offer. Severance is negotiable — the amount, COBRA coverage, equity vesting, outplacement services, and the wording of the release itself.
- Negotiate the reference, too. A neutral-reference provision can matter more than a few extra weeks of pay.
- Ask for the severance amount in writing, separately from your final paycheck. Severance pay is taxable income, and a lump sum is typically subject to supplemental wage withholding. Plan for the tax bill.
- Use your review period. The five business days (or 21/45 days if you are 40+) exist so you can get legal advice. Use them.
- Watch for pressure tactics. “Sign today or the offer is gone” is a red flag — and under both state and federal law, the consideration period is a minimum, not a suggestion.
When to Call an Employment Attorney
Consider getting your severance agreement reviewed if any of the following apply: you believe your termination involved discrimination, harassment, retaliation, or whistleblowing; you are 40 or older and the consideration periods look short; the agreement contains broad confidentiality or non-disparagement language; it includes a non-compete, a no-rehire clause, or a release of wages or PAGA claims; or the employer is pressuring you to sign quickly. In many cases, an attorney review pays for itself in a better negotiated package.
If you have been offered a severance agreement in California, do not sign it without understanding what you are giving up. Legal Corner Law Office offers free consultations to review severance agreements and protect your rights. Call us at (818) 350-7100 — our office is at 550 N Brand Blvd STE 1670, Glendale, CA 91203. We represent employees throughout Los Angeles County and across California.